Gold eases despite firm euro, off 1-month high
SINGAPORE (Reuters) - Gold shrugged off the influence of a firmer euro and turned lower on Monday as speculators booked profits after prices rallied to their highest in more than a month in the previous session on technical buying.
Speculators also turned their attention to negotiations between the White House and Congress this week to avoid a series of automatic tax hikes and spending cuts worth $600 billion set for January, which could tip the economy back into recession.
Although a recession could lift the metal's safe-haven appeal in times of uncertainty, gold would have to clear several key resistance levels before it could revisit a record around $1,920 hit in September 2011, when a worsening debt crisis in Europe sparked in rush in buying.
Gold fell $4.56 an ounce to $1,747.83 by 0246 GMT after rising to $1,754.10 on Friday, its strongest since October 12 due to a drop in the dollar and options-related buying. Gold has gained around 11 percent this year, mainly due to expectations U.S. monetary policy will remain loose.
"It's been a huge spike, so I believe people are cautious as they are still many unresolved issues ahead. There will be a budget meeting in the U.S. tonight to try and find a solution to avert the fiscal cliff. This is one of the issues," said Brian Lan, managing director of GoldSilver Central Pte Ltd.
"Moreover, the problems in the eurozone has not been fully resolved. Gold should meet with resistance at $1755 and shouldn't go above $1,760 this week."
For a 24-hour gold chart analysis: here
The euro touched a seven-month high against the yen and held near a one-month peak versus the dollar on Monday on hopes that Greece will finally secure more emergency loans to keep it afloat.
A stronger euro makes dollar-priced gold cheaper to buy, but cautious investors are awaiting Tuesday's survey of U.S. consumer confidence in November, which could offer clues whether
the fiscal cliff jitters are dampening spirits.
U.S. lawmakers have made little progress in the past 10 days towards a compromise to avoid the harsh tax increases and government spending cuts scheduled for January 1, a senior Democratic senator said on Sunday.
"It is not clear that gold has made a decisive breakout. We'd like to see prices above $1,760 to confirm the move. That would pave the way for a test of $1,790-$1,800 and beyond that the record highs above $1,920," ANZ bank said in a note.
"We think $1,800 will prove to be a step too far in the current market, and remain confident in year-end forecast of $1,780."
In other markets, shares rose in Asia on the hope Greece can avoid a near-term bankruptcy, with euro-zone finance ministers meeting later in the day, but a regional Spanish vote favouring separatist parties clouded Madrid's push for fiscal austerity.
(Editing by Miral Fahmy)
- Tweet this
- Share this
- Digg this
Trending On Reuters
Prime Minister Narendra Modi may consider using an executive order to push through laws overhauling the insurance and coal sectors, if the increasingly fractious parliament fails to pass them soon, two government officials said on Friday. Full Article